Question
Write a short note on 'balancing an account'. Explain by balancing a Cash Account.
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Answer
A balance of an account is the difference between the total of its debit and credit sides. If the total of debit side is more than the total of credit side, the account is said to have a debit balance. It has a credit balance when total of credit side is more than the total of debit side. Balancing a Cash Account.
| ₹ | ₹ | ||||
| 1. | Cash sales | 50,000 | 2. | Sold goods to X on credit | 80,000 |
| 3. | Cash received from X | 56,000 | 4. | Purchased goods from Y on credit | 44,000 |
| 5. | Paid to Y | 30,000 | 6. | Cash purchases from Y | 16,000 |
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State reasons for the following:
The balance in the cash column of the Cash Book is always a debit balance whereas that in the bank column can sometimes be credit.
The balance in the cash column of the Cash Book is always a debit balance whereas that in the bank column can sometimes be credit.
Show the Accounting Equation on the basis of the following and present a balance sheet on the last new equation balances:
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₹
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i.
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Manu started business with cash
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50,000
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ii.
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Bought furniture for
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500
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iii.
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Purchased goods on credit
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4,000
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iv.
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Sold goods on cash (cost ₹ 500) for
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700
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v.
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Received rent
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200
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vi.
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Purchased goods for cash
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1,000
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| vii. | Withdrew for personal use | 700 |
| viii. | Paid to creditors | 400 |
| ix. | Paid for salaries | 200 |
Describe the fundamental accounting equation. How are revenue and expenses related to it?
What is a Credit Note?
Distinguish between profit and gain.
Journalise the following in the books of Som Nath & Sons:
| 2019 | |
| May 1 | Purchased a Machinery for ₹ 1,00,000 and the payment was made by issuing a cheque from Proprietor's saving bank account. |
| May 4 | Received an order from Chakravarti for goods of ₹ 4,00,000 alongwith a cheque of 10% of the order as advance. |
| May 8 | Paid cash ₹ 8,000 to Dushyant and discount allowed by him ₹ 800. |
| May 10 | Goods stolen by an employee (Sale Price ₹ 20,000; Cost ₹ 15,000). |
| May 15 | Purchased stationery worth ₹ 8,000 for office use and ₹ 2,000 for personal use. |
| May 20 | Manoj pays us ₹ 5,400 after deducting 10% for prompt payment. |
| May 28 | Sold goods to Kuber costing ₹ 2,00,000 at 25% above cost less trade discount of 10% and cash discount of 5%. Kuber did not avail the cash discount. |